Larry Ellison’s Bid to Remake Farming Has Been a Bust
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Welcome to Tech News Briefing. It's Thursday, February 27th. I'm Charlotte Gartenberg for The Wall Street Journal.

Larry Ellison, the co-founder and executive chairman of software giant Oracle, wants to change farming using AI, robotics, and software. The company behind his efforts, Sensei Ag, is eight years in the making and has cost him more than half a billion dollars. But

But so far, the greenhouses on a remote stretch of the Hawaiian island of Lanai have not yet boosted output or nutrition with their crops. Our reporter Tom Dauton has been following this story and he tells us how Ellison has sought to transform agriculture with tech and why the effort so far has been a bust.

Tom, we've talked about Oracle on this show before, but for a refresher, who's Larry Ellison? Larry Ellison is the chief technology officer and executive chairman of Oracle, which is this giant database company based in Silicon Valley. It's kind of a Silicon Valley legend, dates back to the era of Microsoft and Apple and that whole cohort of Silicon Valley. And Larry Ellison is kind

kind of one of the members of that club, famous to many people around here as Steve Jobs and Bill Gates is. And he, unlike the rest of them, has remained involved in Oracle. And he is 80 years old now and still extremely involved in the day-to-day, appears on all the earnings calls and still as active as almost anyone is, but certainly compared to someone from his generation of Silicon Valley. How did Sensei Ag get started? What was the idea?

So in addition to being the co-founder, chief technology officer, executive chairman, and largest shareholder of Oracle, he is also currently fourth richest person in the world.

And he, in 2012, bought the island of Lanai, which is one of the islands in Hawaii. Since he bought it, he has been building it up, refurbishing a lot of the high-end resorts that are based there, and also using it as a laboratory of sustainability and trying to see if he can

use the land and other elements and resources on this 141 square mile island as a place to try out a new sustainable future and ways for people to live without pulling too much off the land.

And who did he start it with? So he co-founded the company Sensei with Dr. David Agus, who is a celebrity doctor. He frequently appears on talk shows and like the Today Show. But he's absolutely a respected and legitimate cancer doctor. So Sensei, as like an umbrella organization, is this high-end wellness retreat. There are locations on Lanai. There's one in California. But then as part of that, on Lanai, he wanted to build up a farm.

and grow fruit and vegetables that could be used as part of his grand vision and experiment in sustainability. What's the project looking like right now? Right now, Sensei Ag, which split off from the wellness company, is basically two and a half operations. One is this series of greenhouses they built on Lanai.

And that supplies vegetables and lettuce and tomatoes to the Hawaiian islands. There's also a second facility that they have out in Ontario, which was part of a strategy to expand and start testing and see if they could scale up this whole operation. And then they also have these test facilities that are going on where they're trying to innovate on the technology that's been used in these greenhouses to test.

do the things that they want to do to help fulfill the mission of this company. So on Lanai, what kind of tech is being used in these greenhouses? So the idea and the pitch of this thing is that it was going to be a next generation farm that was going to use the latest technologies and innovate on new technologies that could help crops grow more quickly and healthily and more nutritious. And the plan was to use sensors and cameras and computer vision and be able to monitor the health and growth of the crops.

All of that was part of the pitch and the way that they were talking to the media about this a couple of years ago. In reality, none of that is being used.

The greenhouse that's on Lanai is incredibly basic, like non-high-tech greenhouse standards considered fairly bare bones and primitive. They're growing lots of lettuce and tomatoes, enough to supply the grocery stores on Lanai and around Hawaii. But this is, as someone described to me in the course of reporting out this story, essentially a do-it-yourself project. It's not high-tech at all. Larry Ellison is the fourth richest person in the world.

time and money has he spent on this project so far? He spent quite a bit of time on this. He was really involved in checking in and regularly seeing the progress of this farm in a way that he actually isn't in a lot of his other ventures. So this is extremely important to him in terms of his time, which is very valuable, but also money. As of publication of this story, he's spent well over $500 million just

Coming up, what has that $500 million bought? And just how far is Sensei Ag from the transformative farming vision that inspired it? After the break. Okay, business leaders, are you here to play or are you playing to win? If you're in it to win, meet your next MVP. NetSuite by Oracle. NetSuite is your full business management system in one convenient suite. With NetSuite, you're running your accounting, your finance, your HR, your e-commerce, and more all from your online dashboard.

Upgrade your playbook and make the switch to NetSuite, the number one cloud ERP. Get the CFO's guide to AI and machine learning at netsuite.com slash Wall Street. netsuite.com slash Wall Street. All right, Tom, before the break, you mentioned that someone you spoke with had called this $500 million venture a DIY project. What are some of the challenges that have prevented it from being as high tech as it set out to be?

Within the indoor farming and greenhouse circles, there's a certain expectation of what a well-run farm would look like. It would have systems that are well built and situated to growing the crops, making sure that you don't have intermixing of mature plants and young plants so that pests don't

would spread. There were lots of issues that came up when they were building these farms because of the contractor who had designed them who was not at all familiar with the climate in Lanai and that had to be ripped out and redone. Their floor fans, or at least were sitting inside the greenhouses to provide more evaporative cooling to the crops because when it was initially designed, it didn't have that in mind.

All of these things and more are going on there that when professionals, people who had spent their careers working on greenhouses came and visited this thing, they were really shocked at how unsophisticated everything was in this place. One of the people that I talked to in the story said, given all the high talk about the tech that was being used here in the next era and generation of farming and what it really was, it was like being promised a Bugatti and showing up there and seeing a Yugo instead.

We should note that Sensei's marketing director said last month that the company is making major investments in technology to grow food better and that it plans to share details publicly in approximately 18 months. He also said Sensei's mission remains to, quote, improve human nutrition and preserve the environment by growing food indoors. And it's immensely proud of its efforts. But, Tom, let's take a step back for a second.

Why did Ellison choose Lanai for this project? Larry owns Lanai, and his relationship with the island, which was also very interesting to me while doing this story, is evolving. And it grew into this grander vision and project that he's had about sustainability. So that's one part of it. The other part of it is that Lanai actually has a history of farming that is super interesting. For a time, it was

the world's largest supplier of pineapples. And it was owned for quite a long time of the 20th century by the Dole Fruit Company. I mean, there were these huge pineapple plantations and everyone that lived on the island more or less worked for them. And that whole industry, it went into decline and it ended up actually having a huge deleterious effect on the soil because of poor ag practices. And so there were early visions by Ellison and Agus

to maybe even start a farming venture that could repair the soil and return it to its agricultural utopian glory days. And that didn't work out for cost reasons and everything else. But all of that kind of figured into what Larry was thinking about when he wanted to do this thing and build an indoor farm. The other part of it, Hawaii in general is very reliant on the outside world for its food and lots of other things. 85 to 90% of the population

food that gets eaten in Hawaii comes largely from the mainland. And so it's extremely dependent on outsiders. And lanai is like even a more extreme version of that. So this project is in part meant to be an agricultural example. You wrote that so far it's mostly been a bust based on people you've spoken to.

What's gone well and what's gone not so well? They on Lanai are making lettuce and tomatoes. Like I went to Lanai last August and I went to the two grocery stores, one of which is owned by Larry Ellison, and they have their lettuce on the shelves.

And I talked to the people there and they like it. And, you know, in terms of output, they grew to take 30% share of the locally grown lettuce and tomato market. They have not innovated at all on the way lettuce is grown. Their Canadian facility is only using 5% of the total space that they have in the greenhouse for producing vegetables, lettuce entirely. The

The lettuce market is completely saturated because there are a lot of greenhouses on the East Coast, and so they're not really selling a ton. A lot of the things that they had expected to work just flat out didn't. And to people within the greenhouse industry, they are not considered to be very successful innovators. So have there been any shifts in strategies around the greenhouses to correct for this? At one point...

They were thinking about growing high-end crops, things that would cost a lot of money and being profitable because of that. So rather than affordable lettuce and tomatoes, they're like, why don't we grow expensive fruit that people would maybe want to buy, $100 watermelons or something. They could supply extremely high-quality, sweet watermelons. And then also Ellison was very interested in growing mangoes.

which was not practical given the design of the greenhouses. There was talk about growing wasabi for the Nobu restaurants, which are in the two resorts on Lanai. Ultimately, the chefs at Nobu were like, let's just take stuff that we could use for our dishes.

dishes. And that was how they ended up with lettuce and tomatoes. What's the company's timeline around profitability? They're still figuring that one out. According to Dr. Agus, there is no directive from Ellison to turn a profit on this thing yet. This is an R&D process. They're working on perfecting the technology that could end up changing the face of agriculture. And R&D is a very capital-intensive process. And so it's hard to put a price tag on that. And so

Even though they are selling their lettuce and tomatoes on Hawaii and their lettuce on the East Coast of the U.S. and in Canada, they're not really talking too much these days about turning a profit on these things. That was WSJ reporter Tom Dutton. And that's it for Tech News Briefing. Today's show was produced by Jess Jupiter with supervising producer Catherine Millsop. I'm Charlotte Gartenberg for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.

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